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There is a lot of unnecessary confusion about college financial aid. In fact, many people have serious misconceptions about what financial aid is. So, let’s clear up some misconceptions by defining financial aid and the most important financial aid terms.

Financial aid comes in various forms; scholarships, grants (essentially the same as scholarships), work study funds, tuition waivers, fellowships, teaching assistantships (the last two for graduate students), and loans. And, financial aid can come to students from government, private, and college/university sources.

Scholarships and grants are financial awards for which students do not have to work or make repayment. Such awards normally require high achievement, special talent and/or established financial need. Financial aid in this category is often referred to as gift aid.

Not all financial aid requires demonstration of financial need. A student’s financial aid is determined by a formula which is applied to the answers a student submits on the free federal financial aid form (FAFSA). Students must submit a FAFSA (on paper or online) if they wish to apply for need-based financial aid.

Some colleges may ask you to supplement the information on the FAFSA by completing their form as well. Normally, these institutional forms are very simple and straightforward.

Most colleges and universities offer a form of aid called work study, which allows students to earn money working in campus offices (and occasionally off-campus non-profit organizations). Work study funds, and loans, are referred to as self-help aid.

Students with financial need, as established by the FAFSA, may qualify for government subsidized, low interest loans. Those without need can also borrow, but at higher interest rates.

There really is not much else you need to know about financial aid except for the importance of meeting deadlines, the need to read and follow the instructions on the financial aid letters and publications sent to you, and the fact that you should contact your college financial aid office immediately if you encounter difficulty.

Good luck.

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